Publications

The Next Frontier: Civil Penalties for Undisclosed Offshore Accounts

New York Law Journal

Over the last decade, the government’s pursuit of offshore tax evasion has included criminal cases against taxpayers and their enablers, Deferred Prosecution and Non-Prosecution Agreements with foreign financial institutions, and four Offshore Voluntary Disclosure Programs offered by the IRS. This article discusses an often overlooked fourth prong of the government’s offshore enforcement efforts: the IRS’s imposition of significant civil penalties against taxpayers who were fortunate enough to avoid criminal prosecution. The article also reviews recent cases addressing the IRS’s burden of establishing that a taxpayer’s failure to disclose offshore accounts was willful and the hurdles facing taxpayers and their lawyers seeking to avoid the steep penalties imposed.